Reliability (RLBY) 8-K Entry into a Material Definitive Agreement

RELIABILITY AND MASLOW MEDIA GROUP, INC.

BALANCE SHEETS

December 31, 2018 Consolidated

	Maslow			Reliability		Adj.	Consolidated
ASSETS
CURRENT ASSETS
Cash	$	28,710		$	8,098		$	36,808
Contract receivables		5,864,856						5,864,856
Due from employees		6,119						6,119
Prepaid expenses		234,996						234,996
Current maturity of notes receivable from related parties		3,314,984						3,314,984
Total current assets		9,449,665			8,098			9,457,763
PROPERTY AND EQUIPMENT, at cost
Office equipment		1,375						1,375
Computer equipment		41,709						41,709
Computer software		41,340						41,340
Leasehold improvements		5,725						5,725
Total property and equipment, at cost		90,149						90,149
Accumulated depreciation and amortization		(57,029	)					(57,029	)
Total property and equipment, net		33,120						33,120
OTHER ASSETS
Notes receivable from related parties, less current maturities		-
Total assets	$	9,482,785		$	8,098		$	9,490,883

Notes

For Maslow, current assets increase of $4,391,992 over 2017 was predominantly driven by “Current maturity of notes receivable” from former parent being $3,314,984; $925,341 of which was an increase of the 2017 note for $2,389,643 that in 2017 was booked to Other Assets.

Current ratio improvement over 2017’s .89 to 1.23 can be attributed to increased revenue and cash flow.

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RELIABILITY AND MASLOW MEDIA GROUP, INC.

BALANCE SHEETS, continued

December 31, 2018

	Maslow		Reliability			Adj.	Consolidated
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	793,642					$	793,642
Loan from stockholder or affiliates			$	50,000				50,000
Accumulated Interest on Loans				22,864				22,864
Factoring		4,153,224						4,153,224
Accounts payable		706,563		15,961				722,524
Accrued Payroll		338,923						338,923
Accrued liabilities		775,220						775,220
Deferred Income		235,393						235,393
Income taxes payable		663,882						663,882
Total current liabilities		7,666,847		88,825				7,755,672
Long-term debt, less current maturities		-		65,218				65,218
Deferred income taxes		343,664						343,664
Total liabilities		8,010,511		154,043				8,164,554
STOCKHOLDER’S EQUITY
Common stock, $1 par value, 400 shares authorized, 100 issued and outstanding		100						100
Common stock, without par value, 300,000,000 shares authorized; 17,268,993 shares issued				9,912,150				9,912,150
Retained earnings		1,472,174		(8,963,578	)			(7,491,404	)
Less: Treasury stock at cost, 354,300 shares				(1,094,517	)			(1,094,517	)
Total stockholder’s equity		1,472,274		(145,945	)			1,326,329
Total liabilities and stockholder’s equity	$	9,482,785	$	8,098			$	9,490,883

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RELIABILITY INC.

STATEMENTS OF INCOME

For the Year Ended December 31, 2018

	Maslow			Reliability			Adj.	Consolidated
Revenue
Workforce Management		37,637,982							37,637,982
Cost of Revenue
Workforce Management Cost		33,773,519							33,773,519
Gross profit		3,864,463							3,864,463
General and administrative expenses		2,670,376			23,236				2,693,612
Operating Profit		1,194,087			(23,236	)			1,170,851
Other Income (Expense)
Interest Income, related parties		80,772							80,772
Interest expense		(328,060	)		(9,558	)			(337,618	)
Legal Fees		(50,239	)						(50,239	)
Management fees		(240,599	)						(240,599	)
Other		(87,423	)						(87,423	)
Income before taxes on income		568,538			(32,794	)			535,744
Income tax benefit/(expense)		(182,457	)		100				(182,357	)
Net income	$	386,081			(32,694	)		$	353,387

Notes

For Maslow, revenues increased by $2.578M as the company’s largest clients, AT&T, Goldman Sachs, and DirecTV drove the 7.3% lift.

This, coupled with greater resource efficiency, enabled the $310,161 increase in year-over-year operating profit to $1.194M, and the $306,447 year-over-year increase in net income to $386,081. This represents a 384% increase in net income from 2017 (not shown here).

Legal and Other expenses were related to reverse merger.

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RELIABILITY INC.

STATEMENT OF CASH FLOWS

Years Ended December 31, 2018

	Maslow			Reliability			Adj	Consolidated
A. Cash flows from operating activities:
Net Profit / (Loss)	$	386,081		$	(32,694	)		$	353,387
Adjustments to reconcile net income to net cash used in operating activities:
Deferred Income Taxes		(166,295	)						(166,295	)
Depreciation on Assets		25,361							25,361
Loss on Sale of Fixed Assets		(26,606	)						(26,606	)
Operating Profit before Working Capital Changes		218,541			(32,694	)			185,847
Changes in operating assets and liabilities:
Contract receivables		(1,133,070	)						(1,133,070	)
Due from related parties		(925,341	)						(925,341	)
Due from employee		(6,119	)						(6,119	)
Prepaid expenses		(1,221	)						(1,221	)
Accumulated Interest on Loans					22,864				22,864
Accounts payable		27,885			8,291				36,176
Accrued Payroll		131,234							131,234
Accrued Liabilities		182,087							182,087
Deferred Income		216,726							216,726
Accrued Interest Payable		74,156							74,156
Income Taxes Payable/Tax Paid		305,528			(100	)			305,428
Cash Generated from Operations		(1,128,135	)		31,055				(1,097,080	)
Net Cash from Operating Activities		(909,594	)		(1,639	)			(911,233	)
B. Cash flows from investing activities:
Purchase of fixed assets		2,725							2,725
Net Cash from Investing Activities		2,725							2,725
C.Cash flows from financing activities:
Long Term borrowings		(2,514	)		(48,306	)			(50,820	)
Loan from Shareholders					50,000				50,000
Net advances on Line of Credit		845,981							845,981
Net cash from / (used) by financing activities		843,467			1,694				845,161
Net decrease in cash and cash equivalents		55			(63,402	)			(63,347	)
Cash and cash equivalents at beginning of year		92,112			8,043				100,155
Cash and cash equivalents at end of year		28,710			8,098				36,808

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